EverArc to Buy SK Capital’s Fire-Fighting Products Maker

June 18, 2021

4 minute read

EverArc Holdings, a publicly-listed acquisition company, has agreed to acquire Perimeter Solutions, a portfolio company of SK Capital, in a transaction valued at approximately $2 billion.

Perimeter was formed by SK Capital in March 2018 to acquire the fire safety and oil additives businesses of Israel Chemicals. The fire safety business supplies chemicals and services for fighting wildfires and foams to extinguish fires. Perimeter’s oil additives business provides phosphorus pentasulfide, an inorganic compound that is used in lube oil additives, pesticides and mining chemicals. Perimeter, led by CEO Edward Goldberg, is headquartered west of St. Louis in Clayton, Missouri.

In FY 2020, Perimeter had revenues of $340 million, a gross profit of $162 million, and an EBITDA of approximately $136 million (a 40% EBITDA margin). With an enterprise valuation of $2 billion, this equates to a 14.7x multiple of EBITDA.

“We have been delighted to partner with the management and employees of Perimeter over these past three years,” said Aaron Davenport, a managing director of SK Capital. “Since our acquisition, we have successfully transitioned what was previously a non-core segment within a public company into a thriving standalone organization, with an uncompromising commitment to the highest quality, safety, and reliability standards. The company has grown significantly during ‎our ownership, driven by investments in innovation and commercial excellence, as well as five highly strategic add-on acquisitions.”

Upon closing of the acquisition by EverArc, which is expected during the fourth quarter, Mr. Goldberg and other members of the company’s senior management team will continue to lead Perimeter, and Nicholas Howley and William Thorndike, Jr., the founders and co-chairmen of EverArc, will serve as co-chairmen of the business.

Mr. Howley is the former CEO of TransDigm (NYSE: TDG), a Cleveland-headquartered designer, producer and supplier of aircraft components. TransDigm was founded in 1993 by Mr. Howley, Douglas Peacock, and Kelso & Company, to acquire four aerospace companies – Adel Fasteners, Aero Products Component Services, Controlex Corporation and Wiggins Connectors – from IMO Industries. Mr. Thordike is a founding partner of Housatonic Partners, a Boston and San Francisco-based private equity firm.

“EverArc’s goal is to give our shareholders private equity-like returns with the liquidity and long-term focus of a public market,” said Mr. Howley and Mr. Thorndike in a released statement. “To do so, we target specific economic criteria including recurring revenue streams; long-term secular growth tailwinds; high-value yet low-cost products and services; high returns on tangible capital; and accretive growth through acquisitions. We believe that Perimeter is an excellent fit with our target criteria and look forward to supporting the company’s growth objectives.”

“Perimeter’s comprehensive, safe and effective wildfire prevention and suppression technology is more critical than ever as the severity of wildfires, unfortunately, shows a steady increase around the world,” said Haitham Khouri, a founder of EverArc. “As a public company, Perimeter will have even greater, long-term access to additional debt and equity capital, and we look forward to partnering with Eddie and the rest of Perimeter’s talented team in the company’s next phase of growth.”

SK Capital invests in the specialty materials, chemicals and pharmaceutical sectors and typically invests equity of $100 million to $200 million in each portfolio company. In February 2019, the firm held a final closing of SK Capital Partners Fund V LP with total capital of $2.1 billion. SK Capital was co-founded by Barry Siadat and Jamshid Keynejad and is based in New York City.